NEW RULES – MORE CHANGES CFPB PROPOSED AMENDMENTS: Preparing for the New Rules General Session 1 Monday, July 20 9:00 - 10:30 a.m. Adam Wilde, Attorney at Law

Panelists Adam J. Wilde: Codilis & Associates Brady Lighthall: Weltman Weinberg & Reis Elizabeth Wellborn: Founder Andrew Boylan: McCarthy & Holthus J.P Sellers: Mackie Wolf Zientz & Mann William Corbett CFPB Senior Counsel Brady J. Lighthall is a partner with the firm of Weltman, Weinberg, & Reis Co., LPA and manages the firm’s Real Estate Default practice group. Salmon P. Chase College of Law . HE is based on Cincinatti and practice law in Ohio, Kentucky, and Indiana, J. P. Sellers is a Senior Attorney with Mackie Wolf Zientz & Mann, P.C.  Licensed to practice in Arkansas and Tennessee Juris Doctorate from the University of Arkansas at Little Rock,   His practice focuses on creditor rights in foreclosure, eviction and asset recovery actions.   ACTIVE IN ALFN: In 2014, he was recognized BY ALFN asemerging leader in the mortgage banking industry.  He currently serves on the ALFN’s Junior Professional and Executives Group and the Default Services Practice Group. Short Bio: Andrew Boylan is an Associate Attorney with McCarthy & Holthus and Director of the firm’s Risk Management and Compliance Department. He is admitted to practice law in the States of California and Washington. Adam Wilde is a Supervising Attorney with Codilis and Associates and am licensed to practice in TX and IL. Elizabeth R. Wellborn is the Founder of The Law Offices of Elizabeth R. Wellborn She’s licensed to practice law in State Bars of District of Columbia, Florida, Georgia, New York, and TexaS Received her JD from Emory University Thankful to have her actyivity in the ALFN and she has served as Co-Chairman of the Foreclosure Committee of the ALFN. Liz is presently Co-Chairman of the Default Services Practice Group and the Member Advocacy Committee for the ALFN. Will Corbett Senior Counsel, Office of Regulations, Consumer Financial Protection Bureau Prior EXP North Carolina Office of the Commissioner of Banks Received JD from University of North Carolina School of Law Adam Wilde, Attorney at Law

Introduction 01/10/2014: The New Mortgage Servicing Rules took effect. Drastically changed the mortgage servicing business. Like many rules, they were subject to interpretation. Many of us are still advising our clients on how to comply with these rules. Caselaw will begin to shape how to comply. Last ALFN ANSWERS: CFPB Compliance: How The New Rules Intersect with Other Laws Introductory Slide Codified a new procedures for certain servicers on certain loans, requiring they establish: Created new requirements for billing statement and interest rate notices; Created a clear policy for payment applications and issuing payoffs; Set forth specific policies regarding force placed insurance Established procedural requirements for responding to requests for information and resolution of borrower errors Mandated criteria for servicers to establish general servicing policies, procedures and requirements Created requirements for servicers to engage delinquent borrowers for early intervention and continuty of contact. Established loss mitigation procedures to deal with borrower eligible for loan workout options pursuant to servicer guidelines. Adam Wilde, Attorney at Law

Questions for the Panelists? You can submit them by: Visiting the poll link: https://www.polleverywhere.com/free_text_polls/DhdMuV8EOiqrXo1/web Texting 65261 and your question to 22333 Visiting our Poll site for access to all of our Session polls: Pollev.com/alfn Ask questions or make comments verbally by using the microphones provided in the session room Adam Wilde, Attorney at Law

The Proposed Amendments 12/15/2014: The CFPB proposed new corrections, clarifications, and amendments to RESPA and TILA. Provided a 3 month opportunity to present comments. Industry was very responsive. Over 160 comments were submitted Including the ALFN 2014 ended quite similarly to how it began—much of the country was frozen, blanketed in snow and we were again examining a stack of changes proposed by the CFPB. They sure kept us busy Some very favorable to our business, some very different, and some difficult, having impacts on other laws. The ALFN organized a task force and submitted its comments on behalf of its members: ALFN’s ROLE, on behalf of its members…..was to review these proposed comments and to examine the practicality of the rules and the impact on its members and our industry. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

The Proposed Amendments Successors in interest. Definition of delinquency Requests for information. Force placed insurance Early intervention Loss mitigation Prompt payment crediting Periodic statements Small servicer Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

The Proposed Amendments Purpose of this presentation: We will discuss most of the proposed comments and its impact on law. We will discuss in detail the ALFN’s Official Comment to the Proposed Amendments. We will provide perspective from both the CFPB, impact on servicer, and the legal potentials. DISCLAIMER: Will’s Role. 2014 ended quite similarly to how it began—much of the country was blanketed in snow and we were again examining a stack of changes proposed by the CFPB. Some very favorable to our business, some very different, and some difficult, having impacts on other laws. While we are fortunate to have Will here, certain things he can and cannot discuss. 12 CFR 1024.04 WHAT IS THE RULE? (a) Rule, regulation or interpretation. (1) For purposes of sections 19(a) and (b) of RESPA (12 U.S.C. 2617(a) and (b)), only the following constitute a rule, regulation or interpretation of the Bureau: (i) All provisions, including appendices and supplements, of this part. Any other document referred to in this part is not incorporated in this part unless it is specifically set out in this part; (ii) Any other document that is published in the Federal Register by the Bureau and states that it is an: "interpretation," "interpretive rule," "commentary," or a "statement of policy" for purposes of section 19(a) of RESPA. Except in unusual circumstances, interpretations will not be issued separately but will be incorporated in an official interpretation to this part, which will be amended periodically. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

§1024.39 Early Intervention Requirements Establishing Live contact: What is the current rule? What is the Proposed Rule? How does it differ from the prior rule? The CFPB’s background for the proposed amendment? ALFN’s legal perspective on the Proposed Early Intervention Requirements? Once referred to foreclosure? New bankruptcy implications? Pass it over to Liz Wellborn to discuss the present rule and the proposed amendments. What is the current written notice requirement? Current exemptions? (LW) Continue live contact for the duration of the borrower’s delinquency Ongoing obligcation Communication with Represented party? After foreclosure referral? If there is a cease and desist to communicate with counsel? Who takes on this requirement? A law firm? How can they represent? AW: IL SCR 114. Loss mitigation affidvit. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

1026.41 Periodic Statements Amount Listed on the Periodic Statement: Comment 41(d)(1): Reinstatement, Temporary Loss Mitigation, and Permanent Modifications. The Current Rule CFPB Proposed Amendment CFPB Background Regarding the Proposal ALFN Perspective Providing Statements to Consumers in Bankruptcy: Comment 41(e)(5): Limitation of the exemption The Current Rule – October 2013 IFR Andrew Boylan Amount Listed on Periodic Statement: Andrew to discuss the current rule and the proposed rule. Andrew to ask Will for the background/reasoning behind the proposal. Will to discuss the background behind/reasoning behind the proposal. Andrew to discuss the ALFN’s perspective Providing Statements to Consumers in Bankruptcy: Andrew to discuss the current rule and the October 2013 Interim Final Rule (IFR). Andrew to ask Will for the proposed rule and the background/reasoning behind it. Will to discuss the background behind/reasoning behind the IFR and the newly proposed rule. Also, maybe talk about the stakeholder working group? Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

1026.41 Periodic Statements Charged-Off Loans: Bankruptcy Disclaimers: Comment 41e(6): Charged-Off Loans CFPB Proposed Amendment ALFN Perspective Bankruptcy Disclaimers: Comment 41(f)(2): Discussing Bankruptcy Result Multiple Obligors: Comment 41(f)(4): one notice Charged-Off Loans - Andrew to discuss the proposed amendment and the ALFN’s perspective (same) Bankruptcy Disclaimers Andrew to ask Will for the proposed amendment and reasoning. Will to discuss the proposed amendment and what feedback they solicited from commenters. Andrew to discuss ALFN’s stance. Multiple Obligors Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

Successors in Interest Proposed Rule: Extension of the Mortgage Servicing Rules to Extend to Successor’s in Interest under the Garn St. Germain Act. CFPB’s Proposed Amendment ALFN’s Perspective Legal Issues: FDCPA violations Strategic Default Proposed changes should amendments be made The Garn St. Germain Act’s purpose was to preempt a lender from accelerating a mortgage for a transfer of ownership in the property without a lender’s prior written consent. See 12 USC §1701j-3(a)(1). Under §1701j-3(d)(1-9), a lender is precluded from declaring the sums due and payable if the transfer of ownership involves any of the following: (5)  a transfer to a relative resulting from the death of a borrower; (6)  a transfer where the spouse or children of the borrower become an owner of the property; (7)  a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; (8)  a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or Certain communications that require a servicer and or a service provider to communicate with a successor in interest would violate of the Fair Debt Collections Practices Act. The extension of loss mitigation to a successor in interest encourages strategic default. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

1024.41 Loss Mitigation Procedures 41(b)-1.ii: Receipt of loss mitigation from potential successor in interest. The Rule. CFPB Background Regarding Proposed Amendment ALFN position Review of a loss mitigation application submission: The timing. Current Rule Proposed Rule CFPB Proposed Amendment BRADY LIGHTHALL CFPB proposes 10 days/proposes flexibility. No one document is the same. Color commentary. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

1024.41 Loss Mitigation Procedures 41(c)(2) Incomplete Loss Mitigation Application. Proposed rule: Payment Forbearance and short-term repayment plan. CFPB Proposed Amendment ALFN position 41(c)(2)(iv) Facially complete application timing Proposal CFPB Proposed 1. 41(c)(2)(iv) shortens the time for a servicer to complete review Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

1024.41 Loss Mitigation Procedures 41(f)(1): Prohibition on Foreclosure Review Period: Impact on senior lienholder CFPB Proposed Amendment CFPB Background ALFN position 41(g) Prohibition on Foreclosure Sale The proposal. Color Commentary: State specific approaches. Current RULE: Can still file but must take steps to avoid ruling. Adam Wilde, Attorney at Law

1024.41 Loss Mitigation Procedures (41)(i) duplicative requests Current rule: 1 and done. Proposed rule: CFPB Background ALFN position 41(k) Servicing Transfers Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

Defining Delinquency CFPB’s proposed definition of delinquency: Delinquency is a period of time during which a borrower and the borrower’s mortgage loan obligation are delinquent. A borrower and a borrower’s mortgage loan obligation are delinquent beginning on the day a periodic payment sufficient to cover principal, interest, and, if applicable escrow, became due and unpaid, until such time as the payment is made. CFPB BACKGROUND on Proposals CFPB recommends comments JP SELLERS Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

Defining Delinquency ALFN’s Comments: Non-monetary default. ALFN’s Proposed recommendations: It is recommended that the definitions section contain a definition of the term default in addition to the definition of the term delinquent Monetary Default occurs when the borrower fails to pay the full amount of the periodic payment on the date it is due. Non-Monetary Default occurs when the borrower fails to comply with any obligation outlined in the note or security instrument, other than failure to pay the full amount of the periodic payment on the date it is due. Cross-collateralization: What is the issue. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

Defining Delinquency ROLLING DELINQUENCY: Perpetual default Unintended consequence. Cross-collateralization? Potential pitfalls. Residential? Which one? CFPB poses: Should the Bureau limit servicers’ use of a payment tolerance to a specific dollar amount or percentage of the periodic payment amount, and if so, what should the specific amount or percentage be? CFPB position. We may want to put in additional language addressing cross-collateralization because small servicers are still subject to 12 CFR 1024.41(f).  I’ve already seen this issue presented on two files with smaller banks.  The issue is a borrower’s mortgage loan that secures the borrower’s principal residence is accelerated based on the borrower’s monetary default on another loan (usually a commercial loan) and both loan documents have clauses stating if a borrower becomes delinquent on any obligation with the lender the lender may declare due and owing any and all obligations with that lender.  In doing so, we received referrals to foreclose a mortgage that was current, but because of another default, acceleration was allowed.   In those instances, I’ve advised the client that it is entirely their decision to proceed based on the cross-collateralization clause but clarified I have no idea how a court would rule on this issue if a defendant raised a 1024.41(f) violation. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

CFPB PROPOSED AMENDMENTS: Preparing for the New Rules When we last met: Many of the ambiguities are now being addressed: Definition of delinquency, loss mitigation procedures, timelines. But within the clarity, new issues have developed. How they intersect with other laws, may be problematic. Benefits: Luckily, many interested groups have raised the issues through the comment period. Where does that leave us? CFPB expect to have a final rule Spring of 2016. WHAT ARE WE LEFT WITH??? WE CAN ALL SAY THAT THESE RULES PROVIDE THE MUCH NEEDED CHANGE TO ENSURE HOMEOWNERS AND SERVICERS ARE ACHIEVING THE SYMBIOTIC GOAL OF KEEPING BORROWERS IN THEIR HOMES, WHEN POSSIBLE I dislike the thought that on so many of the issues we’ve tried to address for you really cannot leave servicers and their attorneys with concrete answers to some of the ambiguities and uncertainties the rules have presented. In truth, whether or not servicer can proceed depends….Mainly because we do not have established precedent on these issues. I personally see a lot of districts, circuits, and state courts being divided on many of the issues presented today. That said, I do hope you find our presentation to be informative and beneficial at identifying issues and providing some practical interpretations and best practices for addressing the ambiguities. I want to thank all of our panelists for their thoughtful discussion and input on how to best interpret our new world of mortgage servicing. Questions for the panelists? Text 65261 and your question to 22333 Adam Wilde, Attorney at Law

CFPB Compliance: How The New Rules Intersect with Other Laws Questions? Thank YOU ALFN! You’ve heard from us….We’d like to hear from you? Adam Wilde, Attorney at Law